A study on the customer response towards Mobile Banking

Chapter 1
INTRODUCTION
 Introduction
 Review of literature
 Importance of the study
 Statement of the problems
 Objectives of the study
 Scope of the study
 Sampling Method
 Limitations of the study

1
 INTRODUCTION

State Bank of Mysore was established in the year 1913 as Bank of Mysore
Ltd. under the patronage of the erstwhile Govt. of Mysore, at the instance of
the banking committee headed by the great Engineer-Statesman, Dr. Sir
M.Visvesvaraya. Subsequently, in March 1960, the Bank became an
Associate of State Bank of India. State Bank of India holds 90% of shares.
The Bank's shares are listed in Shimoga, Chennai and Mumbai stock
exchanges.

According to a study by financial consultancy Celent, 35% of online banking

households will be using mobile banking by 2011, up from less than 20%
today. Upwards of 70% of bank center call volume is projected to come from
mobile phones. Mobile banking will eventually allow users to make
payments at the physical point of sale. "Mobile contactless payments” will
make up 10% of the contactless market by 2011.

A banker or bank is a financial institution whose primary activity is to act as

a payment agent for customers and to borrow and lend money. It is an
institution for receiving, keeping, and lending money.Online banking (or
Internet banking) allows customers to conduct financial transactions on a
secure website operated by their retail or virtualbank, credit union.

One has to approach the branch in person, to withdraw cash or deposit a

cheque or request a statement of accounts. In true Internet banking, any
inquiry or transaction is processed online without any reference to the branch
(anywhere banking) at any time. Providing Internet banking is increasingly
becoming a "need to have" than a "nice to have" service. The net banking,
thus, now is more of a norm rather than an exception in many developed

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countries due to the fact that it is the cheapest way of providing banking
services

Banks have traditionally been in the forefront of harnessing technology to

improve their products, services and efficiency. They have, over a long time,
been using electronic and telecommunication networks for delivering a wide
range of value added products and services. The delivery channels include
direct dial – up connections, private networks, public networks etc and the
devices include telephone, Personal Computers including the Automated
Teller Machines, etc. With the popularity of PCs, easy access to Internet and
World Wide Web (WWW), Internet is increasingly used by banks as a
channel for receiving instructions and delivering their products and services
to their customers. This form of banking is generally referred to as Internet
Banking, although the range of products and services offered by different
banks vary widely both in their content and sophistication.

India’s banking sector is growing at a fast pace. India has become one of the
most preferred banking destinations in the world. The reasons are numerous:
the economy is growing at a rate of 8%, Bank credit is growing at 30% per
annum and there is an ever-expanding middle class of between 250 and 300
million people (larger than the population of the US) in need of financial
services. All this enables double-digit returns on most asset classes which is
not so in a majority of other countries. Foreign banks in India achieving a
return on assets (ROA) of 3%, their keen interest in expanding their
businesses is understandable – even more so when compared with the measly
1% average ROA for the Top 1000 banks in the world.

From the perspective of banking products and services being offered through
Internet, Internet banking is nothing more than traditional banking services

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delivered through an electronic communication backbone, viz, Internet. But,
in the process it has thrown open issues which have ramifications beyond
what a new delivery channel would normally envisage and, hence, has
compelled regulators world over to take note of this emerging channel. Some
of the distinctive features of i-banking are:
1. It removes the traditional geographical barriers as it could reach out to
customers of different countries / legal jurisdiction. This has raised the
question of jurisdiction of law / supervisory system to which such
transactions should be subjected,
2. It has added a new dimension to different kinds of risks traditionally
associated with banking, heightening some of them and throwing new risk
control challenges,
3. Security of banking transactions, validity of electronic contract,
customers’ privacy, etc., which have all along been concerns of both
bankers and supervisors have assumed different dimensions given that
Internet is a public domain, not subject to control by any single authority
or group of users,
4. It poses a strategic risk of loss of business to those banks who do not
respond in time, to this new technology, being the efficient and cost
effective delivery mechanism of banking services,
5. A new form of competition has emerged both from the existing players
and new players of the market who are not strictly banks.

Customer satisfaction, a business term, is a measure of how products

and services supplied by a company meet or surpass customer expectation. It
is seen as a key performance indicator within business and is part of
a balanced scorecard.

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 In a competitive marketplace where businesses compete for customers,
customer satisfaction is seen as a key differentiator and increasingly has
become a key element of business strategy.
Organizations need to retain existing customers while targeting non-
customers; Measuring customer satisfaction provides an indication of how
successful the organization is at providing products and/or services to the
marketplace.
Customer satisfaction is an abstract concept and the actual
manifestation of the state of satisfaction will vary from person to person and
product/service to product/service. The state of satisfaction depends on a
number of both psychological and physical variables which correlate with
satisfaction behaviours such as return and recommend rate. The level of
satisfaction can also vary depending on other factors the customer, such as
other products against which the customer can compare the organization's
products.
The measures of customer satisfaction involve a survey with a set of
statements using a scale. The customer is asked to evaluate each statement in
terms of their perception and expectation of performance of the service being
measured.
The tremendous advances in technology and the aggressive infusion of
information technology had brought in a paradigm shift in banking
operations. Internet banking that has revolutionized the banking industry
worldwide has turned out to be the nucleus issue of various studies all over
the world. However there has constantly been a significant gap between
bankers and customers with regard to mobile banking in India. The purpose
of this project is to help fill significant gaps in knowledge about the mobile
banking landscape in India. The project presents data, drawn from a survey of
opinion of mobile banking users and their satisfaction level. It investigates
the extent of usage, the profile of customers and response towards mobile

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banking using univariate statistical analysis. It was also found that there is
significant gap between the perception of the customers and the service
providers i.e. the bankers.

After Internet Banking, Mobile Banking or M-Banking has become the buzz
word in the industry. It’s a fact that Internet Banking has given a boost and
has shown a successful way to consider it as a good alternative procedure
against physical branch banking. Now where ever you are, you can access
your bank account and you can do lot more things like checking your account
balance, transfer to some other account, pay your utility bills online and so
on, just by comfortably sitting at your home or office. But, the technical
disadvantage of Internet Banking is, you have to have internet connectivity
and a computer.

And here Mobile Banking comes into the picture to address the basic
limitation of Internet Banking.

If we only consider Asian developing countries, the availability of mobile

connectivity is really huge. Where one may not find out a landline telephone
or an internet connection, but still in those remote places getting mobile
connectivity is not difficult at all with technology advancements.

So, Mobile Banking has given the traditional banking a newer look
“Anywhere Banking”. Now you don’t need a PC or a laptop with internet
connectivity, just you need your cell phone with you. Considering the Asian
economy countries like China, India and Korea have seen the mobile boom in
last one decade .In Korea, more than 70% of the entire population is carrying
mobile.

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There are over 200 million mobile phone subscribers in India and the number
continues to explode. Financial services companies are now working with
mobile payment players like mChek to offer innovative mobile phone
solutions to urban and rural Indian population.

Mobile banking has the potential to bring a whole host of people that have
no/little access to land lines/internet connections onto the electronic platform
– an innovative way to generate financial inclusion. To do so successfully
will require customer training, technology stabilization and managing
carefully the ‘know your customer’ issues.

Importance of the study

Mobile Banking in India The position of banking industry is not excellent in
India. In 2011, sixty-five percent of India’s population did not have access to
a bank account. The lots of Indian population till date have not their personal
bank accounts. Reserve Bank of India also requested to the members of the
country, each person has minimum one saving account in any bank of India.
But still there is a lack of awareness in the people. So, mobile banking is a
good option for the banking industry to increase their customers. With the
help of mobile telecommunication technology the customers make numerous
transactions in the bank at any time. There are many researches which show
that India is moving fast towards mobile users as well as mobile internet
users which is also a bigger strength to the banking industry to promote the
mobile banking. This paper shows that there is a big need of adoption of new
technology especially in banking industry which promotes the bank account
holders in our country.

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ATM and internet banking have been around in India for a while. While both
modes have had some success, penetration and use levels have been
moderate.

While ATMs offer convenience, they pose a perceived security threat in India
given instances of mugging around them. Senior citizens and women appear
reluctant to use ATMs if they have a choice to go to a branch and withdraw
money in safety. The security situation in India shows little sign of
improvement and therefore a large scale proliferation of ATMs will remain a
challenge. Internet banking, on the other hand, relies on PC and internet
penetration. Estimates suggest that there are approx 40 million internet users
which are expected to rise to 100 million soon – despite this growth,
penetration and use levels remain low, especially in non-metro areas.
Research also suggests that internet banking is picking up amongst the target
user group.

While internet penetration and use in India is relatively low, mobile phone
penetration is much higher and growing rapidly. There are over 200 million
mobile phone subscribers in India and the number continues to explode.
Financial services companies are now working with mobile payment players
like mChek to offer innovative mobile phone solutions to urban and rural
Indian population. Reserve Bank of India has restrictions on non-bank
involvement in money transfer. Therefore, development of mobile financial
services applications is being sponsored primarily by banks in India.

 To understand the profile of the customers availing mobile banking

facility.
 To understand the attitude of users towards mobile banking contents.

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Literature Review
It is relevant to refer briefly to the previous studies and research in the related
areas of the subject to find out and to fill up the research gaps, if any.
Literature on financial services can generally be found; a number of books
are available on banking related aspects as merchant banking, loan
syndication, securitization, profitability and productivity etc. but, few studies
are undertaken on the role of technology in the banking services.

Uppal R.K: studies the extent of mobile banking in Indian banking industry
during 2000-2007. The study concludes that among all e-channels, ATM is
the most effective while mobile banking does not hold a strong position in
public and old private sector but in new private sector banks and foreign
banks m-banking is good enough with nearly 50 pc average branches
providing m-banking services. M-banking customers are also the highest in
ebanks which have positive impact on net profits and business per employee
of these banks. Among all, foreign banks are on the top position followed by
new private sector banks in providing m-banking services and their efficiency
is also much higher as compared to other groups. The study also suggests
some strategies to improve m-banking services.

Abdullah D.N.M.A. and Rozario F: study the influence of service and

product quality towards customer satisfaction. 149 respondents from one of
the well known hotel in Kuala Lumpur, Malaysia are selected as a sample.
Psychometric testing is conducted to determine the reliability and validity of
the questionnaire. The study finds positive significant relationship between
place/ambience and service quality with customer satisfaction. Although,
relationship between food quality and customer satisfaction is significant, it is
in the negative direction. Future researchers can concentrate on determining
attributes that influence customer satisfaction when cost/price is not a factor

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and reasons for place/ambience is currently becoming the leading factor in
determining customer satisfaction.

Aktan B., Teker E. and Erosy P: examines the usage of internet in Turkey
to make a basic due-diligence investigation for the financial institutions,
including banking, stock trading, insurance and provision of financial
information over the period 2005 and 2008. The findings show that internet
usage in Turkey with its young population has continued to grow
dramatically in financial services in terms of customers and financial
transactions of various natures.

Azouzi Dhekra: aims to check if the current and prompt technological

revolution altering the whole world has crucial impacts on the Tunisian
banking sector. On the basis of empirical analysis, the study concludes that
panoply of factors is affecting the customers attitude toward e-banking. For
instance; age, gender and educational qualifications seem to be important and
they split up the group into electronic banking adopters and traditional
banking defenders and so, they have significant influence on the customers’
adoption of e-banking. It also shows that despite the presidential incentives
and in spite of being fully aware of the ebanking benefits, numerous
respondents are still using the conventional banking. Fear of loss because of
transactions errors or hackers plays a significant role in alienating Tunisian
customers from online banking. Finally, the study highlights the limitations
and suggests some research perspectives.

Ganesan R. and Vivekanandan K, describe a secured hybrid architecture

model for the internet banking using Hyper elliptic curve cryptosystem and
MD5. This hybrid model is implemented with the Hyperelliptic curve
cryptosystem (HECC) and it performs the encryption and decryption

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processes in an efficient way merely with an 80-bit key size. The various
screen shots given in this contribution shows that the hybrid model which
encompasses HECC can be considered in the internet banking environment to
enrich the privacy and integrity of the sensitive data transmitted between the
clients and the application server. Hua G, investigates the online banking
acceptance in China by conducting an experiment to investigate how users’
perception about online banking is affected by the perceived ease of use of
website and the privacy policy provided by the online banking website. The
110 undergraduate students in Chinese University are involved in the 32
investigation. The study finds that both perceived ease of use and privacy
policy have a significant impact on user’s adoption of online banking. The
study also investigates relative importance of perceived ease of use, privacy,
and security. Perceived ease of use is of less importance than privacy and
security. Security is the most important factor influencing user’s adoption.
The study also discusses the implications of these results and limitations.

Ismail A., Abdullah M.M.B. and Sebastian K.F: explore the relationships
among service quality features (responsiveness, assurance, and empathy),
perceived value and customer satisfaction in context of Malaysia. The
empirical data is drawn from 102 members of an academic staff of a
Malaysian public institution of higher learning using a survey questionnaire.
The results indicate that the interaction between perceived value and
responsiveness is not significantly correlated with customer satisfaction, the
interaction between perceived value and assurance also does not correlate
significantly with customer satisfaction and the interaction between perceived
value and empathy correlated significantly with customer satisfaction. Thus
the results demonstrate that perceived value has increased the effect of
empathy on customer satisfaction, but it has not increased the effect of
responsiveness and assurance on customer satisfaction. Janson N , analyzes

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the consequences of the major instability introduced by internet banking on
the bank’s ability to manage a liquidity crisis in Northern Rock Bank. The
study shows that inconsistency of the Bank of England policy lead to the
initial bank run and that because it persists in that direction it further lead to
the bank’s bankruptcy. Internet banking does not cause the failure of the bank
but it certainly accelerates the fall of the bank which calls for a greater
consistency of the central bank role as a lender of last resort. The study
concludes that despite the existence of lender of last resort and deposit
insurance scheme, markets participants and individual depositors in particular
do not like confusing messages during uncertain times.

Kamble S. S., Sawhney S. and Bansal R: aims to identify online service

quality dimensions that facilitate the customer satisfaction for the e-travel and
e-mart online retail. Further, they evaluate how well these dimensions are
perceived by the customers so as to provide an objective measure of service
performance. Ten e-service quality dimensions are 33 identified and the
extent to which current online retailers provide online service attributes are
analyzed to be low or moderate on most of the dimensions for both the e-
travel and e-mart service providers. The model tested for the relationship
between the service quality dimensions and customer satisfaction is also
found to be correlated at a low level.

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Statement of the Problems
At the introduction of mobile banking, it was thought that the system would
make work easy for commercial banks especially that most of the
transactions were to be done through mobile phones. This meant that no
more lines for the customers and less costs to the commercial banks as well
as an increased market share for them. However, it is unbelievable that
commercial banks are having a hard time to cope with the fast growing
mobile banking that they initially embraced so much, which is the reason as
to why the researcher has taken much interest in analyzing the effects of
mobile banking on activities of commercial banks such that possible
solutions could be raised to help commercial banks follow suit with the trend
of mobile banking.

Objectives of the study

 To know about the level of awareness of mobile banking among the
people who use this service.
 To know the level of usage of mobile banking.
 To analyse the gap between the perceptions of banks offering services and
the customers availing the facility.
 To understand the usage pattern and preference of the customers with
regard to frequency, place and banks.
 To understand the attitude of the users making banking transactions
through the mobile.

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Scope of the study
The study is restricted to SBM branch, Shimoga city in the year 2016. The
main purpose of this study to get an overview of the mobile banking sector in
the Indian economy and study as to how it has helped change the banking
habits of various individuals.
Sources of Data
Collection of original facts by the researcher forms primary data. There
are two types of data collection:
1. Primary data, and
2. Secondary data.

Primary Data:
Information collection specifically for the purpose of investigation, as
on one hand is known as primary data or raw data. These are not readily
available. This research work mainly depends on questionnaire. With
reference to these questionnaires were distributed to the respondents to
collect the required data. In case of busy respondents the information was
asked orally and filled by the researcher himself. The questionnaires thus
collected were administered to the sample and analyzed.

Secondary Data
Secondary data are those collected from interviewing party, secondary
data includes data for the study and includes appropriate materials from
journals, bank websites, text books, and information from internet has also
been required wherever necessary.
Sampling Method
The process of designing a research study involves many inter-related
decisions. The most significant decision is the choice of research approach as
it determines how the information is obtained.

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 Selecting particular tool for data collection, the research has adopted
the Descriptive Research method. This method focus in seeking insights into
the general nature of the problem and to focus on the relevant variables that
needs to be considered to carry on the research. Through exploratory research
the researcher can establish priorities among the research questions for the
learning about the practical problems of carrying out the research.
Sampling design
This is the methodology of structure for calculating the collection of
data correctly and efficiently and specifies methods and actions. The research
design constitutes the blue print for the collection, measurement and analysis
of data. It helps the researcher in distribution of limited resources by posing
crucial choices. This includes experiments, interviews, observation and the
analysis of records or the combination of these.
Descriptive Research Design has been used in this study. The objective
of descriptive research is to describe things such as market potential for
service or the demographics and attitudes of customers who use the service.
Descriptive research also known as statistical research, describes data and
characteristics about the population or phenomenon being studied.

Sampling Procedure
Field work is conducted and primary information is obtain from the
consumers of mobile banking car by means of questionnaires administrated
personally to the respondents.

Sampling Technique

Area sampling is used Random sampling method is adopted to select

respondents in different regions of the Shimoga city. Every respondent is
later as a unit of sample and respondents chosen are a mix of age, education
occupation, income, etc. The opinion was collected from 100 respondents.

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Technique of Analysis Sampling Plan

Sampling techniques may be classified as non-probability and probability

techniques. Non probability sampling techniques relay on the research
judgement. Consequently, they do not permit an objective evaluation of the
precision of the sample results and estimate obtain or not statistically project
able to the population. The commonly used non-probability sampling
techniques include convenience sampling, judgement of quota sampling and
snowball sampling.

In probability sampling techniques, sampling units are selected by chance.

Each sampling units has a non-zero chance of being selected and the
researcher can specify every potential sample of the given size that could be
drawn from the population, as well as the probability of selection of each
sample. It is also possible to determine the precession of sample estimate
inferences make projection to the target population.

Percentage calculation, tabulation class tables etc.., are the technique use to
analyze the data collected from the customer’s opinion survey. In addition to
this graphs of bar and pie charts are also drawn.

Sample size:

The sample size is of 100 respondent consisting of 70 males and 30 females

consumers in Shimoga city.

Limitations of the study

 The sample size was restricted to hundred customers.
 Resources like time and cost was a constraint.
 The study was conducted in Shimoga city only.
 Customer were not co-operative that’s why accurate information were
not provided by them.

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 Chapter 2
Growth and Development of Indian Banking Sectors

 Deposit growth has been steady

 Investments/developments
 Government Initiatives
 Adoption of banking technology
 Banking in Karnataka

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 Growth and Development of Indian Banking Sectors

The world’s second largest populated country, India, is the apple of the eye
for the world now. The world economies are seeing it as their potential
market. This has been going on since quite some time now, ever since 1991
reforms of liberalization, globalization and privatization. Indian markets in
urban areas have grown appreciably and are on the verge of saturation, so
corporates have started tapping rural markets, since more than 60 per cent of
India’s population lives in rural areas.

Consumption trends followed by the rural Indian are considered to be the

driver of future growth of companies. And this trend of tapping rural markets
is visible across all sectors now, be it FMCG, IT, Banking, education etc. For
example, today, India is in better state than China because, our GDP is less
dependent on exports as compared to them, where maximum revenues come
from exporting to the European and US markets. Thus, tapping the rural
markets is most important for us to be a self sustaining economy.

According to researches carried out by the Reserve Bank of India (RBI), on

an all India basis, 59 per cent of the adult population in the country has bank
accounts and 41 per cent don’t. In rural areas, the coverage of banks is 39 per
cent, against 60 per cent in urban areas. There is only one bank for a
population of13000.

But the problem is that banks have not been able to reach a vast majority of
the rural population; the rural poor have limited access to organized,
affordable and transparent financial services such as savings, loans,
remittances and insurance services etc. It is important for them to have access

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to banking services, especially credit and insurance, to enlarge livelihood
opportunities and to empower themselves to take charge of their lives.

An improved rural banking under the umbrella of the RBI by the means of
mobile banking, self help groups and microfinance institutions is important.
The effective use of development communication, using Information and
Communication Technology (ICT) will help to create awareness for financial
inclusion through banks and make it a success.

Here, it is important to use technology as an enabler via mobile banking,

because large numbers of Indians are using mobile phones. Using mobile
phones for banking operations will cut costs by branchless banking, as there
is no need for physical infrastructure and human resources, which is a
problem in rural areas and a major constraint in carrying out banking
operations. It will also make it convenient, safe, reliable and transparent.

With above initiatives and reaching out to women, self help groups, and
microfinance institutions, the banks will not only be able to reach out to half
of the population of India that is women, but as these changes expand access
to financial services for the low income segment and rural masses, the effects
can be measured in many ways, not just in the volume of GDP growth, but
new jobs and income generations, greater personal safety for women, better
education for their children, timelier health care for themselves and their
empowerment

Thus, future development of India and the growth of India Inc. lies in
financial inclusion, by tapping the rural markets through banks. This will not
only help corporates in fulfilling their social responsibilities, but is important

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for fuelling growth in other industries and to keep the economy growing and
moving. Truly, there are fortunes at the bottom of the pyramid.

Deposit growth has been steady

Total money supply increased at a CAGR of 11.14 per cent during FY06–16*
Between FY06–16*, narrow money supply (M1) rose at a CAGR of 7.69 per
cent to US$ 392.8 billion, broad money supply (M2) increased at a CAGR of
6.49 per cent to US$ 395.3 billion and money supply (M3) grew at a CAGR
of 11.14 per cent to US$ 1.8 trillion by the end of October’15

Time deposits with banks have shown highest average growth of 12.9 per
cent during FY06–16*, and stood at US$ 1.44 trillion by the end of
October’15

As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently
capitalised and well-regulated. The financial and economic conditions in the

20
country are far superior to any other country in the world. Credit, market and
liquidity risk studies suggest that Indian banks are generally resilient and
have withstood the global downturn well.

Indian banking industry is expected to witness better growth prospects in

2015 as a sense of optimism stems from the Government’s measures towards
revitalizing the industrial growth in the country. In addition, RBI’s new
measures may go a long way in helping the restructuring of the domestic
banking industry.

Market Size
The Indian banking system consists of 26 public sector banks, 25 private
sector banks, 43 foreign banks, 56 regional rural banks, 1,589 urban
cooperative banks and 93,550 rural cooperative banks, in addition to
cooperative credit institutions. Public-sector banks control nearly 80 percent
of the market, thereby leaving comparatively much smaller shares for its
private peers.

As of November 11, 2015, 192.1 million accounts had been opened under
Pradhan Mantri Jan Dhan Yojna (PMJDY) and 165.1 million RuPay debit
cards were issued. These new accounts have mustered deposits worth Rs
26,819 crore (US$ 4 billion).
Standard & Poor’s estimates that credit growth in India’s banking sector
would improve to 12-13 per cent in FY16 from less than 10 per cent in the
second half of CY14.

Investments/developments
In the past few months, there have been many investments and developments
in the Indian banking sector

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 Global rating agency Moody's has upgraded its outlook for the Indian
banking system to stable from negative based on its assessment of five
drivers including improvement in operating environment and stable
asset risk and capital scenario.
 Lok Capital, a private equity investor backed by US-based non-profit
organisation Rockefeller Foundation, plans to invest up to US$ 15
million in two proposed small finance banks in India over the next one
year.
 The Reserve Bank of India (RBI) has granted in-principle licences to
10 applicants to open small finance banks, which will help expanding
access to financial services in rural and semi-urban areas.
 IDFC Bank has become the latest new bank to start operations with 23
branches, including 15 branches in rural areas of Madhya Pradesh.
 The RBI has given in-principle approval to 11 applicants to establish
payment banks. These banks can accept deposits and remittances, but
are not allowed to extend any loans.
 The Bank of Tokyo-Mitsubishi (BTMU), a Japanese financial services
group, aims to double its branch count in India to 10 over the next
three years and also target a 10 per cent credit growth during FY16.
 State Bank of India has tied up with e-commerce portal Snapdeal and
payment gateway Paypal to finance MSME businesses.
 The United Economic Forum (UEF), an organisation that works to
improve socio-economic status of the minority community in India,
has signed a memorandum of understanding (MoU) with Indian
Overseas Bank (IOB) for financing entrepreneurs from backward
communities to set up businesses in Tamil Nadu
 The RBI has allowed third-party white label automated teller machines
(ATM) to accept international cards, including international prepaid

22
 cards, and said white label ATMs can now tie up with any commercial
bank for cash supply.
 The RBI has allowed Indian alternative investment funds (AIFs), to
invest abroad, in order to increase the investment opportunities for
these funds.
 In order to boost the infrastructure sector and the banks financing long
gestation projects, the RBI has extended its flexible refinancing and
repayment option for long-term infrastructure projects to existing ones
where the total exposure of lenders is more than Rs 500 crore (US$
75.1 million).
 RBI governor Mr Raghuram Rajan and European Central Bank
President Mr Mario Draghi have signed an MoU on cooperation in
central banking. “The memorandum of understanding provides a
framework for regular exchange of information, policy dialogue and
technical cooperation between the two institutions. Technical
cooperation may take the form of joint seminars and workshops in
areas of mutual interest in the field of central banking,” RBI said on its
website.
 RBL Bank informed that it would be the anchor investor in Trifecta
Capital’s Venture Debt Fund, the first alternative investment fund
(AIF) in India with a commitment of Rs 50 crore (US$ 7.51 million).
This move provides RBL Bank the opportunity to support the
emerging venture debt market in India.
 Bandhan Financial Services raised Rs 1,600 crore (US$ 240.2 million)
from two international institutional investors to help convert its
microfinance business into a full service bank. Bandhan, one of the two
entities to get a banking licence along with IDFC, launched its banking
operations in August 2015.

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Government Initiatives
The government and the regulator have undertaken several measures to
strengthen the Indian banking sector.
 The Government of India is looking to set up a special fund, as a part
of National Investment and Infrastructure Fund (NIIF), to deal with
stressed assets of banks. The special fund will potentially take over
assets which are viable but don’t have additional fresh equity from
promoters coming in to complete the project.
 The Reserve Bank of India (RBI) plans to soon come out with
guidelines, such as common risk-based know-your-customer (KYC)
norms, to reinforce protection for consumers, especially since a large
number of Indians have now been financially included post the
government’s massive drive to open a bank account for each
household.
 To provide relief to the state electricity distribution companies,
Government of India has proposed to their lenders that 75 per cent of
their loans be converted to state government bonds in two phases by
March 2017. This will help several banks, especially public sector
banks, to offload credit to state electricity distribution companies from
their loan book, thereby improving their asset quality.
 The Reserve Bank of India (RBI), the Department of Industrial Policy
& Promotion (DIPP) and the Finance Ministry are planning to raise the
Foreign Direct Investment (FDI) limit in private banks sector to 100
per cent from 74 per cent.
 Government of India aims to extend insurance, pension and credit
facilities to those excluded from these benefits under the Pradhan
Mantri Jan Dhan Yojana (PMJDY).

24
 The Government of India announced a capital infusion of Rs 6,990
crore (US$ 1.05 billion) in nine state run banks, including State Bank
of India (SBI) and Punjab National Bank (PNB). However, the new
efficiency parameters would include return on assets and return on
equity. According to the finance ministry, “This year, the Government
of India has adopted new criteria in which the banks which are more
efficient would only be rewarded with extra capital for their equity so
that they can further strengthen their position."
 To facilitate an easy access to finance by Micro and Small Enterprises
(MSEs), the Government/RBI has launched Credit Guarantee Fund
Scheme to provide guarantee cover for collateral free credit facilities
extended to MSEs upto Rs 1 Crore (US$ 0.15 million). Moreover,
Micro Units Development & Refinance Agency (MUDRA) Ltd. was
also established to refinance all Micro-finance Institutions (MFIs),
which are in the business of lending to micro / small business entities
engaged in manufacturing, trading and services activities upto Rs 10
lakh (US$ 0.015 million).
 The central government has come out with draft proposals to
encourage electronic transactions, including income tax benefits for
payments made through debit or credit cards.
 The Union cabinet has approved the establishment of the US$ 100
billion New Development Bank (NDB) envisaged by the five-member
BRICS group as well as the BRICS “contingent reserve arrangement”
(CRA).
 The government has plans to set up a fund that will provide surety to
banks against loans given to students for higher education.

25
Adoption of banking technology
The IT revolution has had a great impact on the Indian banking system. The
use of computers has led to the introduction of online banking in India. The
use of computers in the banking sector in India has increased many fold after
the economic liberalisation of 1991 as the country's banking sector has been
exposed to the world's market. Indian banks were finding it difficult to
compete with the international banks in terms of customer service, without
the use of information technology.
The RBI set up a number of committees to define and co-ordinate banking
technology. These have included:
 In 1984 was formed the Committee on Mechanisation in the Banking
Industry (1984) whose chairman was Dr. C Rangarajan, Deputy
Governor, Reserve Bank of India. The major recommendations of this
committee were introducingMICR technology in all the banks in the
metropolises in India.[28] This provided for the use of standardized cheque
forms and encoders.
 In 1988, the RBI set up the Committee on Computerisation in Banks
(1988) headed by Dr. C Rangarajan. It emphasised that settlement
operation must be computerised in the clearing houses of RBI
in Bhubaneshwar, Guwahati,Jaipur, Patna and Thiruvananthapuram. It
further stated that there should be National Clearing of inter-
city cheques at Kolkata, Mumbai, Delhi, Chennai and MICR should be
made operational. It also focused on computerisation of branches and
increasing connectivity among branches through computers. It also
suggested modalities for implementing on-line banking. The committee
submitted its reports in 1989 and computerisation began from 1993 with
the settlement between IBA and bank employees' associations.
 In 1994, the Committee on Technology Issues relating to Payment
systems, Cheque Clearing and Securities Settlementin the Banking

26
 Industry (1994) was set up under Chairman W S Saraf. It
emphasised Electronic Funds Transfer (EFT) system, with the
BANKNET communications network as its carrier. It also said that MICR
clearing should be set up in all branches of all those banks with more than
100 branches.
 In 1995, the Committee for proposing Legislation on Electronic Funds
Transfer and other Electronic Payments (1995) again emphasised EFT
system.

Banking in Karnataka
The state of Karnataka, particularly the region comprising the coastal districts
of Dakshina Kannada and Udupi is called as the cradle of banking in
India.[1] This is because seven of the country's leading banks, Canara
Bank, Syndicate Bank, Corporation Bank, Vijaya Bank, Karnataka
Bank, Vysya Bank and the State Bank of Mysore originated from this
state. The first five in the above list of banks were established in the districts
of Udupi and Dakshina Kannada. These districts have one among the best
distribution of banks in India - a branch for every 500 persons.[2] Between
1880 and 1935, 22 banks were established in coastal Karnataka, nine of them
in the city of Mangalore.

Origin
The origin of banking in Karnataka's coastal region can be traced to the year
1868 when the Presidency Bank of Madras opened a branch to cater to the
needs of British companies involved in exporting plantation produce. In
1912, the Indian Co-operative Societies Act in 1912 further energised the
financial sector in this region leading to the establishment of a lot of co-
operative societies. The freedom movement of India also played a crucial role
as can be seen in the establishment of Karnataka Bank which was created as

27
an offshoot of the swadeshi movement of 1905. These banks were earlier
created to address the main sector in the economy i.e. agriculture but later
they diversified to address other economical sectors as well.

Growth
The Indian Government's notification of nationalisation of banks in 1969 and
1980, resulted in lot of these banks being nationalised with the Indian
Government now owning some amount of control over these banks. As of
today, State Bank of Mysore, Canara Bank, Vijaya Bank and Vysya Bank
have their headquarters in Shimoga, Corporation Bank and Karnataka Bank
are headquartered in Mangalore while Syndicate Bank is headquartered
in Manipal. The entry of the private sector into the banking sector with
aggressive marketing has led these banks to rethink some of their strategies.
Earlier, banking was the main activity that was undertaken by these banks but
due to the competition, they have been forced to diversify into other areas
like insurance, equity and mutual funds. They have also been forced to
upgrade their technology and introduce services like ATMs and online-
banking transactions.

As of March 2002, Karnataka had 4767 branches of different banks servicing

the people of the state. The number of people served by each branch was
11,000 which is lesser than the national average of 16,000, thereby indicating
better penetration of banking in the state.

Banks
The scheduled banks in Karnataka had total deposit of Rs. 1346.99 billion
constituting 6.4% of the total deposits in scheduled banks in India as of
March 2006. The credit given by these banks stood at Rs. 1034.55 billion,

28
6.8% of total credit given by scheduled banks. The per capita deposit stood at
Rs. 23,976 and per capita credit at Rs. 18,415.

Canara Bank
Canara Bank was established in 1906 by Ammembai Subba Rao Pai
established the Canara Bank Hindu Permanent Fund in Mangalore, India, on
1 July 1906.Who collected handful of rice from each household, pooled the
rice and sold it and used the money earned for the bank's capital. It has grown
since then and now has 2542 branches in India and one overseas branch
in London. In the fiscal year 2005-06, Canara Bank became India's second-
largest public sector bank in terms of advances and deposits.The bank
changed its name to Canara Bank Limited in 1910 when it incorporated. In
2002-03, the bank went in for its Initial Public Offer (IPO) and raised Rs.110
crores. The India government holds a 73% stake in Canara Bank.

Corporation Bank
Corporation Bank was founded by a group philanthropists headed by Khan
Bahadur Haji Abdulla Haji Kasim Saheb Bahadur in the town of Udupi in
1906 under the name of "The Canara Banking Corporation (Udupi) Ltd." In
1972, it got its present name of Corporation Bank and it was nationalised in
1980.

State Bank of Mysore

State Bank of Mysore (SBM) was established in 1913 under the name Bank
of Mysore Ltd. A banking committee headed by Sir M Visweswaraiah was
formed under the patronage of the Mysore state which led to the formation of
this bank. In 1960, this bank was made an associate bank of the State Bank of
India which holds 92.33% of shares of SBM. As of Mar-2007, SBM has 644
branches and provides employment to 9604 employees.

29
Karnataka Bank
The Karnataka Bank was founded on 18 February 1924 at Mangalore.The
bank initially catered to people of Karnataka, has now spread its network of
branches throughout the country.

Syndicate Bank
Syndicate Bank was established in the town of Udupi in 1925 under the name
"Canara Industrial and Banking Syndicate Ltd" with a capital of Rs.8000/- by
three people - Upendra Ananth Pai, Vaman Kudva, and Dr. T M A Pai. The
main objective for stating the bank was to extend financial assistance to the
local weavers who were crippled by a crisis in the handloom industry. In
1963, it got its present name of Syndicate Bank. Now the bank has 2125
branches.

30
 Chapter 3
Profile of State Bank of Mysore

 Branch Network
 Financial Profile
 Business Profile
 Organisational Setup
 Management Committee
 Vision
 Mission
 Mobile Banking Services

31
 Profile of State Bank of Mysore

State Bank of Mysore was established in the year 1913 as Bank of Mysore
Ltd. under the patronage of the erstwhile Govt. of Mysore, at the instance of
the banking committee headed by the great Engineer-Statesman, Dr. Sir
M.Visvesvaraya. Subsequently, in March 1960, the Bank became an
Associate of State Bank of India. State Bank of India holds 90% of shares.
The Bank's shares are listed in Shimoga, Chennai and Mumbai stock
exchanges.

Branch Network
The Bank has widespread network of 1,026 Branches (as on 31.12.2015) and
9 Extension Counters spread all over India including 20 Small and Medium
Enterprise Branches, 8 Industrial Finance Branches, 3 Corporate Accounts
Branches, 7 Specialized Personal & Services Banking Branches, 9
Agricultural Development Branches, 3 Government Business Branches, 2
Specialized NRI Branches, offering wide range of services to the customers
besides 5 Service Branches and 1 Asset Recovery Branch rendering backup
support to the Bank.

Financial Profile
The Paid-up capital of the Bank as on 31.12.2015 is ` 48.01 crores of which
State Bank of India holds 90% share. The Bank has achieved a Capital
Adequacy Ratio of 11.92% under Basel-III guidelines. The Bank has an
enviable track record of continuously earning profits and payment of
uninterrupted dividend since its inception in 1913. The Bank earned a net
profit of ` 253 crs during the 9 months period ended December 2015.

32
Business Profile
Total Deposits of the Bank as at the end of December 2015 stood at ` 68,476
crs and the total Advances stood at ` 53,191 crs, including export credit of `
1,408 crs. The Bank is a major player in Foreign Exchange dealings also and
has recorded a merchant turnover of over ` 40,879 crs and a trading turnover
of over ` 3,87,995 crs during the half year ended December 2015.

Human Resources
The Bank has a dedicated workforce of 10,617 employees consisting of 3,761
supervisory staff and 6,856 non-supervisory staff (as on 31.12.2015). The
skill and competence of the employees have been kept updated to meet the
requirement of our customers keeping in view the changes in the business
environment.

Organisational Setup
While the Chairman of State Bank of India is also the Chairman of the Bank,
The Managing Director is assisted by two Chief General Manager and 13
General Managers.

33
Management Committee of the Bank
Managing Director Mr Sharad Sharma
Chief General Manager (Retail Banking) Mr Sajeev Krishnan
Chief General Manager(Commercial Banking) Mr T.Keshav Kumar
General Manager (Human Resource & General
Administration) Mr A.N.Krishnan
General Manager (SAMG) Mr C P Kishor Babu
General Manager (Priority Sector, Rural Banking
& Financial Inclusion)
General Manager (Corporate Network, Bangalore) Mr K S Subbaraman
General Manager (Risk Management and Credit
Policy and Procedures)
General Manager (Treasury) & Chief Financial
Mr M.P. Sridharan
Officer
General Manager - Retail Network – I , HQ -
Mr Suresh Savekar
Bangalore
General Manager(Vigilance) Mr Vijay Dube
General Manager( IT, New Business & Govt
Mr George M Kurian
Business)
General Manager Retail Network - llI, HQ -
Mr Ashok K Pradhan
New Delhi
General Manager Retail Network - ll HQ -
Mr S Venkateswarlu
Mysore

34
Organization chart of branch

Manager

Officer

Special Assistant

Head casher

Special Assistant

Single window
Operator

Head Messenger

Sweeper/ Peon

35
Vision of State Bank of Mysore
• MY SBM.
• MY CUSTOMER FIRST.
• MY SBM: FIRST IN CUSTOMER SATISFACTION.
Mission
• We will be prompt, polite and proactive with our customers.
• We will speak the language of young India.
• We will create products and services that help our customers achieve their
goals.
• We will go beyond the call of duty to make our customers valued.
• We will be of service even in the remotest part of our country.
Customer service
Customer service is the main motto of every Bank. The State Bank of
Mysore is successfully provided. All the services. The bank stipulated by
the Reserve Bank of India. The State Bank of Mysore is a private sector
commercial banking company. Register under the companies Act 1956.
Though it is a private sector bank is bas provided all the services of a bank.
The services offered by a bank may be broadly constituted as the
mobilizing deposits and lending operations.

DEPOSIT SCHEMES:
Firstly in mobilizing deposits bank has its own scheme along with
those of reserve bank of India. They may be discussed as fallows:
1. Fixed Deposits:
As fixed deposits means the deposits kept for a definite period with in
which that cannot be with draw. The State Bank of Mysore has several
separate schemes for different customers.

36
Fixed deposits from other small bank
This is a separate scheme for deposits of the staff of the State Bank of
Mysore. The employees working in the State Bank of Mysore will invest
their money under this scheme in their own bank. Since this constitute
deposits of its own the bank has name it fixed deposits from bank.
b. Fixed deposits from others:
Other means the public the deposits of non-staff in maintained under
this scheme. The deposits of outside customers constitute the deposits under
the scheme.
c. Fixed deposit from N.R.E:
Under this scheme a non-resident can open a fixed deposit account in
India. Rupees through remittance from abroad or transfer from any other
bank. Are the brands of the State Bank of Mysore? This is a special scheme,
which is offered for non-resident external that wants to open an account in
Indian rupees.
d. Fixed deposits FCNR account [Foreign currency Non-resident
Account]
under this scheme a non-resident Indian can one or invest in fixed
deposit account in foreign currency. The bank has its own ruler for his type
of account. They are accepted for the American dollars and England’s
pounds. Any person who wants to invest in the State Bank of Mysore in
foreign currency has to send only these currencies. The money sent in the
currencies is converted into designated currency.
2. Recurring Deposits: -[Cumulative Deposits]
Recurring deposits are those accounts under which transactions are
recurring. These types of accounts are generally. Maintained by businessmen
and to who have regular transactions. These accounts are also called
cumulative deposits.

37
 There non-resident sponsors an account in the Indian currency. The
accounts are called cumulative deposits non-Resident externals.
3. Current Account:
This account is sponsored by the RBI. The bank staff may maintain
this account. Separator A/C is maintained too deposits non-resident from
bank staff these accounts are called. Current A/C.
Current account from other are opened by the public i.e. non staff
customers.
This can also be opened by the non-resident Indian in foreign currency.
4. Saving Bank Account
These accounts are maintained by the low and middle income group of
people to mobilize therefore small savings.
The Bank has maintained. Separate records for the staff public and
non-staff customers and non-resident Indian sin foreign currency. These
accounts are called savings bank account from bank form other and savings
bank NRE.
Balance sheet
Balance Sheet of State Bank of Mysore ------------------- in Rs. Cr. -------------------
Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Capital and Liabilities:

Total Share Capital 48.01 48.01 46.80 46.80 46.80
Equity Share Capital 48.01 48.01 46.80 46.80 46.80
Reserves 4,313.58 3,940.86 4,280.05 3,935.97 3,630.68
Net Worth 4,361.59 3,988.87 4,326.85 3,982.77 3,677.48
Deposits 66,063.76 61,560.32 56,969.04 50,186.30 43,225.47
Borrowings 5,688.35 5,473.97 3,854.20 4,425.59 3,307.95
Total Debt 71,752.11 67,034.29 60,823.24 54,611.89 46,533.42
Other Liabilities &
2,784.45 2,393.46 2,076.98 1,803.15 1,815.72
Provisions
Total Liabilities 78,898.15 73,416.62 67,227.07 60,397.81 52,026.62
Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

38
Assets
Cash & Balances with RBI 3,891.92 2,858.84 2,404.67 3,025.85 2,705.68
Balance with Banks, Money
364.27 82.38 1,100.09 336.86 234.60
at Call
Advances 52,025.86 49,481.95 44,932.57 39,835.31 34,029.81
Investments 20,565.66 19,190.20 16,774.58 14,732.70 12,927.14
Gross Block 936.59 860.32 824.28 749.41 725.00
Revaluation Reserves 570.78 559.72 5.68 5.76 5.84
Net Block 365.81 300.60 818.60 743.65 719.16
Other Assets 1,684.62 1,502.66 1,196.57 1,723.44 1,410.23
Total Assets 78,898.14 73,416.63 67,227.08 60,397.81 52,026.62

Contingent Liabilities 43,035.16 27,880.36 17,781.10 19,162.85 17,432.94

Book Value (Rs) 908.41 830.78 924.55 851.02 785.79

Source : Dion Global Solutions Limited

Mobile Banking Services

State Bank Freedom – Your Mobile Your Bank
Away from home, bills can be paid or money sent to the loved ones or
balance enquiries done anytime 24x7!!! That is what State Bank FreedoM
offers -convenience, simple, secure, anytime and anywhere banking.
The service is presently available on java enabled mobile phones over SMS/
GPRS/ WAP as also non java phones with GPRS connection. The service can
be availed over the free GPRS facilities offered by various mobile service
providers. The services for other non-Java mobile phones are under
development and will be offered using Unstructured Supplementary Services
Data (USSD).

The following functionalities will be provided in the Phase I:

 Funds transfer (within and outside the bank –using NEFT)
 Enquiry services (Balance enquiry/ Mini statement)
 Request services (cheque book request)

39
 Bill Payment (Utility bills, credit cards)
 M Commerce (Mobile Top Up, Merchant payment, SBI life insurance
premium)

Business Rules Governing Mobile Banking Services:

 The Mobile Banking Service will be available to all the customers having
a satisfactory running account (Current/ Savings). The customers will
have to register for the services.
 Daily transaction limits for fund transfer and bill/ merchant payment will
be Rs.50,000/-per customer with an overall calendar month limit of
Rs.2,50,000/-
 The service will be carrier-agnostic i.e. all customers can avail the mobile
banking service with the Bank irrespective of the service provider for their
mobiles.
 The service is free of charge. However, the cost of SMS / GPRS
connectivity will have to be borne by the customer.

2. Mobile Banking Service over SMS:

The service is available on all phones (java/non java) with/without GPRS
connection. No need to download the application. Ordinary SMS charges are
applicable.
The following functionalities are available:
 Enquiry Services (Balance Enquiry/Mini Statement)
 Mobile Top up
 DTH Top up/ recharge
 IMPS- Mobile to Mobile Transfer
 Change MPIN

40
Business Rules
 All Current/ Savings Bank Account holders in P segment and Current
accountholders in SME segment are eligible.
 Transaction limit per customer per day is Rs.1,000/- with a calendar
month limit of Rs.5,000/- . However, customers desiring to transact up to
Rs.5000/- per day or Rs25,000/- per month may do so after obtaining an
One Time Password (OTP)
 All customers can avail the Service irrespective of telecom service
provider.
 The Service is free of charge. SMS cost will be borne by the customer.
 As a matter of abundant precaution, Customers are requested to delete all
the messages sent to the number 9223440000, once the response for their
request has been received.

3. Mobile Banking Service over USSD (Unstructured Supplementary

Service Data)
The service is available on all phones (java/non java) with/without GPRS
connection. No need to download the application.
The following functionalities are available:
 Enquiry Services (Balance Enquiry/Mini Statement)
 Mobile Top up
 Funds Transfer (within Bank)

Business Rules
 All Current/ Savings Bank Account holders in P segment and Current
accountholders in SME segment are eligible.
 Transaction limit per customer per day is Rs.1,000/- with a calendar
month limit of Rs.5,000/-

41
 The Service is available for subscribers of select telecom operators only.
 The Service is free of charge. USSD session charges will be borne by the
customer.
 The service is session based and requires a response from the user within a
reasonable time.

Immediate Payment Service (IMPS)

National Payment Corporation of India (NPCI) has offered Banks and
Financial Institutions a new payment service called “Immediate Payment
Service (IMPS)”. Our Bank has gone live on March 28, 2012 in IMPS
through Mobile Banking Service.
Currently majority of interbank mobile fund transfer transactions are
channelised through NEFT mechanism. Under NEFT, the transactions are
processed and settled in batches, hence are not real time. Also, the
transactions can be done only during the working hours of the RTGS system
IMPS offer an instant, 24X7, interbank electronic fund transfer service
through mobile phones. IMPS facilitate customers to use mobile instruments
as a channel for accessing their bank accounts and put interbank fund
transfers in a secured manner with immediate confirmation features.
The advantages of IMPS are that there is no need to register the payee /
beneficiary and transfer of funds is real time. Customers can send / receive
money using mobile number and an additional 7 digit Mobile Money
Identifier (MMID) number.

State Bank of Mysore Net Profit (FY15 over FY14) Increases 49%
Bengaluru, Karnataka, India
The Board of Directors of State Bank of Mysore approved the financial
results for the year ended 31st March 2015 at its meeting held in Mumbai on
23rd April 2015. Bank has recorded impressive performance, y-o-y, on the

42
Profitability front and Asset Quality, besides expanding its retail business
base, as reflected in the following parameters:

 Net Profit up 49% y-o-y

 Non Interest Income up 34%
 GNPA down by 154 bps and NNPA by 113 bps
 PCR improves by 980 bps to 69.3%.
 Retail Advances increase by 19%, with 51% share of Housing Loans.
 Bank expanded footprint by opening landmark 1000th branch near
Mysuru, besides 1 more Zonal Office at Bengaluru, to give focus on
business in our core area.

1. Profitability Metrics:
The Bank recorded its highest profit in 2 years by posting Net Profit of Rs.
409 crs, an impressive 49% growth over FY14.

Non-Interest income increased by 34% to Rs.768 crs, buoyed by 154%

increase in recovery in Written-off accounts, which constitute 27% of Net
Income. The Bank also recorded higher profit on Commission/brokerage, Fee
based income, Forex & Treasury transactions.

2. Asset Quality:
Due to the pro- active steps taken by the Bank in recovery of NPAs and
through strategic sale of impaired assets Gross NPA declined to Rs. 2,136 crs
(4.0%) from a high of Rs. 2,819 crs (5.54%) in Mar'14 . The Net NPA
declined to Rs. 1,122 crs (2.16%) from Rs. 1,630 crs (3.29%) in Mar'14. The
reduction has taken place across all segments & sectors. SBM is one of the

43
few Banks to have successfully bucked the trend of rising NPAs and
achieved reduction in both absolute and %age terms.

Provision Coverage Ratio of the Bank improved from 59.5 % to 69.3%.

3. Business / Balance Sheet Metrics
The total business of the Bank crossed a business level of Rs. 1,19,300 crs as
on 31.03.2015. The deposits increased by 7.3% to reach a year–end level of
Rs. 66,064 crs (average level - Rs. 61,662 crs & 10 % growth). The Retail
sector advances increased by 16%, though overall growth was muted at 4%
as the Bank went slow on Corporate advances, as mentioned above. The
overall year-end Advances reached a level of Rs. 53,296 crs (average level -
Rs. 48,930 crs & average growth 9%).
The Credit Deposit ratio stood at 81.9% as against the ASCB level of 76.5%.
The Investments increased by 7% to register a level of Rs. 20,666 crs. Net
profit for the year stood at Rs. 409 crs. The Bank’s Board at its meeting dated
23.04.2015 has approved payment of final dividend of 10% (aggregate -
60%) for the year 2014-15, vis-a-vis 30% declared last year. The dividend
payout ratio is 8.46%.

4. Key Financials:
 The Return on Assets is at a level of 0.54% while Return on Equity is
9.40%.
 Net Worth of the Bank increased from Rs. 3,764.77crs to Rs. 4,346.03 crs
representing a growth of over 15 %.
 The Bank has been BASEL-III compliant and Capital to Risk Weighted
Assets (CRAR) under Basel III is at 11.42%, against the regulatory
benchmark of 9.00%. Core CRAR is at 8.36%. Under Basel II guidelines
it stood at 12.02%.
 Earning Per Share (EPS) is at Rs. 85.

44
 Yield on advances improved from 10.95% to 11.11% due to increase in
Advances level and better control over asset quality.

5. Retail Sector:
 The direct agricultural advances increased by 15%, from Rs. 6,002 crs to
Rs. 6,963 crs and the overall agricultural advances stood at Rs. 7,895 crs
for the year ended 31.3.2015.
 Micro and Small Enterprises (MSE): The Bank’s advance to Micro and
Small Enterprises for FY14-15 at Rs. 5,267 crs against Rs. 4,524 crs for
FY13-14, reflecting y-o-y growth of 16.4%.
 The Personal segment advances grew by Rs. 1,636 to reach a level of Rs.
10,500 crs. Housing loan grew by Rs. 974 crs in FY15 which at Rs. 5,370
crs constitutes 51% of Personal segment advances. The growth rate in
FY15 in respect of retail segment advances was 16% growth over FY14.

6. Technology:
The Bank installed 227 new ATMs during the year, taking the total number
of ATMs installed to 1,334, of which 1,154 are in the State of Karnataka. Our
ATMs are part of 51,000 strong ATM network of the State Bank Group. The
card base has crossed 54 lacs as on 31st March 2015. The Bank has also
installed 4,597 POS machines, besides 400 Green Channel Machines, mobile
POS, SSKs and e-lobby which enabled us to migrate 48% of business
through ADC.

7. Branch Expansion:
The Bank opened 71 Banking branches during the year. The total branch
network of branches as on 31st March 2014 stood at 1015, which includes 830
branches in the State of Karnataka. The Bank opened its 1000th branch at
Siddharamanhudi,an unbanked village near Mysore.

45
8. Financial Inclusion :
The Bank covered all the allotted 260 villages with a population of above
2,000 and 2,988 villages with population below 2,000, through 38 brick &
mortar branches and remaining through BC outlets. The Bank also covered
all the 11.97 lakh households in
the 713 SSAs and 634 Wards allotted to the Bank with atleast 1 bank account
under Pradhan Mantri Jan-Dhan Yojana. Bank has opened 8,07,359
accounts under PMJDY, taking total number of FI accounts opened to
14,91,758, with a balance of Rs.70.54 crs. The Bank has successfully seeded
53% Aadhaar numbers in PMJDY accounts. 7,60,196 (94%) RuPay Cards
have also been issued to the PMJDY account holders.

9) Corporate Social Responsibility:

During FY14-15, Bank took special interest in dedicating a multi-disciplinary
paediatric ward named ‘State Bank of Mysore Centenary Block’ for
augmenting facilities for treating children affected with cancer at Kidwai
Memorial Institute of Oncology, Bengaluru, constructed with a donation of
Rs. 1.57 crs from SBM. The Bank donated over Rs. 95 lacs towards
improvement of health services to various hospitals and Research Institutes .
Bank also participated in the Swachchh Bharat Abhiyaan and ear marked Rs.
25 lacs for constructing Green Toilet at rural schools.

46
 Chapter 4
Mobile Banking Service to Customer

 Introduction
 Mobile Banking Services
 Challenges for a Mobile Banking Solution

47
 Mobile Banking Service to Customer

Mobile banking (also known as M-Banking, SMS Banking etc.) is a term

used for performing balance checks, account transactions, payments etc. via a
mobile device such as a mobile phone. Mobile banking today is most often
performed via SMS or the Mobile Internet but can also use special programs
called clients downloaded to the mobile device.

The advent of the Internet has revolutionized the way the financial services
industry conducts business, empowering organizations with new business
models and new ways to offer 24x7 accessibility to their customers.

The ability to offer financial transactions online has also created new players
in the financial services industry, such as online banks, online brokers and
wealth managers who offer personalized services, although such players still
account for a tiny percentage of the industry.

Over the last few years, the mobile and wireless market has been one of the
fastest growing markets in the world and it is still growing at a rapid pace.
According to a study by financial consultancy Celent, 35% of online banking
households will be using mobile banking by 2011, up from less than 20%
today. Upwards of 70% of bank center call volume is projected to come from
mobile phones. Mobile banking will eventually allow users to make
payments at the physical point of sale. "Mobile contactless payments” will
make up 10% of the contactless market by 2011.

Many believe that mobile users have just started to fully utilize the data
capabilities in their mobile phones. In Asian countries like India, China,
Bangladesh, Indonesia and Philippines, where mobile infrastructure is

48
comparatively better than the fixed-line infrastructure, and in European
countries, where mobile phone penetration is very high (at least 80% of
consumers use a mobile phone), mobile banking is likely to appeal even
more.

This opens up huge markets for financial institutions interested in offering

value added services. With mobile technology, banks can offer a wide range
of services to their customers such as doing funds transfer while travelling,
receiving online updates of stock price or even performing stock trading
while being stuck in traffic. According to the German mobile operator
Mobilcom, mobile banking will be the "killer application" for the next
generation of mobile technology.

Mobile devices, especially smart phones, are the most promising way to
reach the masses and to create “stickiness” among current customers, due to
their ability to provide services anytime, anywhere, high rate of penetration
and potential to grow. According to Gartner, shipment of smartphones is
growing fast, and should top 20 million units (of over 800 million sold) in
2009 alone.

In the last 4 years, banks across the globe have invested billions of dollars to
build sophisticated internet banking capabilities. As the trend is shifting to
mobile banking, there is a challenge for CIOs and CTOs of these banks to
decide on how to leverage their investment in internet banking and offer
mobile banking, in the shortest possible time.

The proliferation of the 3G (third generation of wireless) and widespread

implementation expected for 2005–2010 will generate the development of

49
more sophisticated services such as multimedia and links to m-commerce
services.

Mobile banking business models

A wide spectrum of Mobile/branchless banking models is evolving.
However, no matter what business model, if mobile banking is being used to
attract low-income populations in often rural locations, the business model
will depend on banking agents, i.e., retail or postal outlets that process
financial transactions on behalf telecom companies or banks. The banking
agent is an important part of the mobile banking business model since
customer care, service quality, and cash management will depend on them.
Many telecom companies will work through their local airtime resellers.
However, banks in Colombia, Brazil, Peru, and other markets use
pharmacies, bakeries, etc.

These models differ primarily on the question that who will establish the
relationship (account opening, deposit taking, lending etc.) to the end
customer, the Bank or the Non-Bank/Telecommunication Company (Telco).
Another difference lies in the nature of agency agreement between bank and
the Non-Bank. Models of branchless banking can be classified into three
broad categories - Bank Focused, Bank-Led and Nonbank-Led.

Bank-focused model
The bank-focused model emerges when a traditional bank uses non-
traditional low-cost delivery channels to provide banking services to its
existing customers. Examples range from use of automatic teller machines
(ATMs) to internet banking or mobile phone banking to provide certain
limited banking services to banks’ customers. This model is additive in

50
nature and may be seen as a modest extension of conventional branch-based
banking.

Bank-led model
The bank-led model offers a distinct alternative to conventional branch-based
banking in that customer conducts financial transactions at a whole range of
retail agents (or through mobile phone) instead of at bank branches or
through bank employees. This model promises the potential to substantially
increase the financial services outreach by using a different delivery channel
(retailers/ mobile phones), a different trade partner (telco / chain store)
having experience and target market distinct from traditional banks, and may
be significantly cheaper than the bank-based alternatives. The bank-led
model may be implemented by either using correspondent arrangements or
by creating a JV between Bank and Telco/non-bank. In this model customer
account relationship rests with the bank

Non-bank-led model
The non-bank-led model is where a bank does not come into the picture
(except possibly as a safe-keeper of surplus funds) and the non-bank (e.g
telco) performs all the functions.

Mobile Banking Services

Mobile banking can offer services such as the following:
Account Information
1. Mini-statements and checking of account history
2. Alerts on account activity or passing of set thresholds
3. Monitoring of term deposits
4. Access to loan statements
5. Access to card statements

51
 6. Mutual funds / equity statements
7. Insurance policy management
8. Pension plan management
9. Status on cheque, stop payment on cheque
10. Ordering check books
11. Balance checking in the account
12. Recent transactions
13. Due date of payment (functionality for stop, change and deleting of
payments)
14. PIN provision, Change of PIN and reminder over the Internet
15. Blocking of (lost, stolen) cards

Payments, Deposits, Withdrawals, and Transfers

1. Domestic and international fund transfers
2. Micro-payment handling
3. Mobile recharging
4. Commercial payment processing
5. Bill payment processing
6. Peer to Peer payments
7. Withdrawal at banking agent
8. Deposit at banking agent

Especially for clients in remote locations, it will be important to help them

deposit and withdraw funds at banking agents, i.e., retail and postal outlets
that turn cash into electronic funds and vice versa. The feasibility of such
banking agents depends on local regulation which enables retail outlets to
take deposits or not.

52
A specific sequence of SMS messages will enable the system to verify if the
client has sufficient funds in his or her wallet and authorize a deposit or
withdrawal transaction at the agent. When depositing money, the merchant
receives cash and the system credits the client's bank account or mobile
wallet. In the same way the client can also withdraw money at the merchant:
through exchanging sms to provide authorization, the merchant hands the
client cash and debits the client's account.

Investments
1. Portfolio management services
2. Real-time stock quotes
3. Personalized alerts and notifications on security prices

Support
1. Status of requests for credit, including mortgage approval, and
insurance coverage
2. Check (cheque) book and card requests
3. Exchange of data messages and email, including complaint submission
and tracking
4. ATM Location

Content Services
1. General information such as weather updates, news
2. Loyalty-related offers
3. Location-based services
Based on a survey conducted by Forrester, mobile banking will be attractive
mainly to the younger, more "tech-savvy" customer segment. A third of
mobile phone users say that they may consider performing some kind of
financial transaction through their mobile phone. But most of the users are

53
interested in performing basic transactions such as querying for account
balance and making bill payment.

Challenges for a Mobile Banking Solution

Key challenges in developing a sophisticated mobile banking application are:

Interoperability
There is a lack of common technology standards for mobile banking. Many
protocols are being used for mobile banking – HTML, WAP, SOAP, XML to
name a few. It would be a wise idea for the vendor to develop a mobile
banking application that can connect multiple banks. It would require either
the application to support multiple protocols or use of a common and widely
acceptable set of protocols for data exchange.

There are a large number of different mobile phone devices and it is a big
challenge for banks to offer mobile banking solution on any type of device.
Some of these devices support J2ME and others support WAP browser or
only SMS.

Overcoming interoperability issues however have been localized, with

countries like India using portals like R-World to enable the limitations of
low end java based phones, while focus on areas such as South Africa have
defaulted to the USSD as a basis of communication achievable with any
phone.

The desire for interoperability is largely dependent on the banks themselves,

where installed applications (Java based or native) provide better security, are
easier to use and allow development of more complex capabilities similar to

54
those of internet banking while SMS can provide the basics but becomes
difficult to operate with more complex transactions.

Security
Security of financial transactions, being executed from some remote location
and transmission of financial information over the air, are the most
complicated challenges that need to be addressed jointly by mobile
application developers, wireless network service providers and the banks' IT
departments.
The following aspects need to be addressed to offer a secure infrastructure for
financial transaction over wireless network:
1. Physical part of the hand-held device. If the bank is offering smart-card
based security, the physical security of the device is more important.
2. Security of any thick-client application running on the device. In case
the device is stolen, the hacker should require at least an ID/Password
to access the application.
3. Authentication of the device with service provider before initiating a
transaction. This would ensure that unauthorized devices are not
connected to perform financial transactions.
4. User ID / Password authentication of bank’s customer.
5. Encryption of the data being transmitted over the air.
6. Encryption of the data that will be stored in device for later / off-line
analysis by the customer.

Scalability & Reliability

Another challenge for the CIOs and CTOs of the banks is to scale-up the
mobile banking infrastructure to handle exponential growth of the customer
base. With mobile banking, the customer may be sitting in any part of the
world (true anytime, anywhere banking) and hence banks need to ensure that

55
the systems are up and running in a true 24 x 7 fashion. As customers will
find mobile banking more and more useful, their expectations from the
solution will increase. Banks unable to meet the performance and reliability
expectations may lose customer confidence. There are systems such as
Mobile Transaction Platform which allow quick and secure mobile enabling
of various banking services. Recently in India there has been a phenomenal
growth in the use of Mobile Banking applications, with leading banks
adopting Mobile Transaction Platform and the Central Bank publishing
guidelines for mobile banking operations.

Application distribution
Due to the nature of the connectivity between bank and its customers, it
would be impractical to expect customers to regularly visit banks or connect
to a web site for regular upgrade of their mobile banking application. It will
be expected that the mobile application itself check the upgrades and updates
and download necessary patches (so called "Over The Air" updates).
However, there could be many issues to implement this approach such as
upgrade / synchronization of other dependent components.

Personalization
It would be expected from the mobile application to support personalization
such as:
1. Preferred Language
2. Date / Time format
3. Amount format
4. Default transactions
5. Standard Beneficiary list

56
 Chapter 5
DATA ANALYSIS AND INTERPRETATION

57
 Analysis and Interpretation
The findings are summarized in the following section:
Table no.1
Showing gender wise classifications of Respondents
Sl. No Gender No. Of Respondents Percentage
1 Male 70 70%
2 Female 30 30%
Total 100 100%
Source: Primary data
Analysis:
The female user’s represents 30 percent of the sample size while 70 percent
of the users are male.
Chart no.1
Graph showing gender wise classification of respondents
80%
70%
70%

60%

50%
Percentage

40%
30%
30%

20%

10%

0%
Male Female

Interpretation:
Majority of the mobile banking customers are men and a majority of women
are yet to adopt this technology

58
 Table no.2
Age wise classification of respondents
Sl. No Age (in Years) No. Of Respondents Percentage
1 20 – 25 20 20
2 26 – 30 46 46
3 31 – 35 16 16
4 36 – 40 10 10
5 Above 41 8 8
Total 100 100
Source: Primary data
Analysis:
From the above table it is clear that the respondents were chosen from all the
age groups. There were 20% respondents from the age group ranging
between 20-25 years; 46% of the respondents between 26-30 years; 16% of
the respondents between 31-40 years; 8% of the respondents falling above the
age group of 41 years. It is significant that the number of respondents in the
age group of 26-30 years is optimum.
Chart no.2
Showing the age wise classification of the respondents

8% 20%
10%
20 - 25
16% 26 - 30
31- 35
46%
36 - 40
Above 41

Interpretation:
From the above chart it is clear that age group ranging between 20 years to 40
years and above, the respondents is not divided equally. There was least
number of people in the category of above 41 which they may be thinking
that mobile banking is not so secure. While majority of respondents belong to
the age group 26-30.

59
 Table no.3
Education wise classifications of the respondents
Sl. No Education No. Of Respondents Percentage
1 Post Graduates 50 50
2 Graduates 32 32
3 Diploma Holders 10 10
4 Others 08 08
Total 100 100
Source: Primary data
Analysis:
From the table, it is very much clear that most of the respondents were post
graduates; they constituted 50% of the total number of respondents. Out of
total respondents 32% were graduates; 10% were diploma holders; 08% of
the respondents were have completed their basic education.

Chart 3
Sowing education wise classifications of the respondents

Others 8%

Diploma Holders 10%

Graduates 32%

Post Graduates 50%

0% 10% 20% 30% 40% 50% 60%

Percentage

Interpretation:
From the above data, we can interpret that majority of respondents were
postgraduates, who have knowledge about mobile banking and ready to
transact their bank accounts by using mobile. After the post graduates the
graduates and diploma holders were the respondents who are interacting.

60
 Table no.4
Showing details of occupation of the respondents
Sl. No Occupation No. of Respondents Percentage
1 Self – Employed 10 10
2 Salaried 66 66
3 Students 16 16
4 Housewives 08 08
Total 100 100
Source: Primary data
Analysis:
From the table, it can be said that salaried respondents 66% occupy the major
portion of the total. And next are the students who are 16% occupy the
second position and self – employed, housewife’s and professional people are
in next positions respectively.
Chart no.4
Graph showing the occupation of the respondents

66%
70%

60%

50%
Percentage

40%

30%
16%
20% 10% 8%
10%

0%
Self - Employed Salaried Students Housewives

Interpretation: From the above data, we can interpret that the business
community and housewives is yet to avail this facility. The reasons could be
attributed to difficulty in maintaining accounts as very less transactions are
involved.

61
 Table no.5
Table showing details of income of the respondents
Sl. No Income Group No. Of Respondents Percentage
1 < 10,000 14 14
2 10,001 – 20,000 26 26
3 20,001 – 30,000 16 16
4 >30,001 44 44
Total 100 100
Source: Primary data
Analysis:
From the above table it is clear that 14% of the respondents lied in the
income group of less than Rs.10,000; 26% respondents were in the income
group of Rs.10,001 to 20,000; 16% of the respondents were from income
group of Rs.20,001 to 30,000; and the rest 44% of the respondents were from
income group of Rs.30,001 and above.

Chart no.5
Showing the income earned monthly by the respondents

45%
> 30,001

14%
20,001 - 30,000
Income Group

26%
10,001 - 20,000

< 10,000 14%

0% 10% 20% 30% 40% 50%

Percentage

Interpretation:
Major number of respondents was in the income group of above Rs. 30,001.
These were the respondents from salaried who had good knowledge of the
mobile banking. There were good number of respondents from the income
group of Rs.10,001 – 20,000 but these people transact because of the
maintenance charges by the banks.

62
 Table no.6
Table showing awareness of mobile banking
Sl. No Gender No. Of Respondents Percentage
1 Yes 76 76
2 No 24 24
Total 100 100
Source: Primary data
Analysis:
It is well clear from the chart that majority of people 76% o people who use
mobile banking are well aware of it .
Chart no.6
Showing awareness of mobile banking

Respondents

24%

Yes
No
76%

Interpretation:
We can easily interpret from the chart that most of the respondents who are
using mobile banking are well aware of it and rest 24% are not because of the
reason that they recently started using the service and are new to it.

63
 Table no.7
Table showing frequency of mobile banking usage
Sl. No Frequency No. Of Respondents Percentage
1 Daily 14 14
2 Weekly 30 30
3 Monthly 44 44
4 As and when needed 12 12
Total 100 100
Source: Primary data
Analysis:
From the above table it is clear that significant number of customers uses
mobile banking monthly and corresponds to 44% of the total. Weekly
customers occupy 30% of the total respondents. But the remaining use net
only when the need arises.
Chart 7
Graph showing frequency of usage

12% 14%

Daily
Weekly
Monthly
30%
44% As and When needed

Interpretation:
The analysis very clearly indicates that still a substantial percentage (12%) of
customers who have mobile banking use it only when required. They need to
be brought into the mainstream by their respective banks. So that the banks
can see that transaction rate increases. Most of the students and housewife’s
have a low frequency of transactions because of their income level.

64
 Table no.8
Banks you use as your Mobile Banking service providers.
Sl. No Banks No. Of Respondents Percentage
1 SBI 46 46
2 SBM 30 30
3 HDFC 26 26
4 Others 18 18
Total 100 100
Source: Primary data
Analysis:
From the above table we can easily analyze that maximum number of
respondents 46 used mobile banking service by SBI after that 30 and26
respondents used SBM and HDFC respectively, while 9 respondents used
other banks as their service provider.

Chart no.8
Banks you use as your Mobile Banking service providers.

Respondents

18%
46%
SBI
26%
ICICI
HDFC
30% Others

Interpretation:
Here through this chart it can interpreted that people usually prefer public
bank like SBI over SBM and HDFC for mobile banking .A majority of
respondents 46% use SBI as their mobile banking service provider followed
by SBM and HDFC.

65
 Table no.9
Satisfaction from service provided by banks
Sl. No Gender No. Of Respondents Percentage
1 Yes 56 56
2 No 44 44
Total 100 100
Source: Primary data
Analysis:
From table we get mixed reaction about the satisfaction from the mobile
banking service 56% of respondents said they are satisfied and 44% were not
satisfied.
Chart no.9
Satisfaction from service provided by banks

Respondents

44%

56% Yes
No

Interpretation:
From the above chart it can be interpreted that an ample amount of people
44% were not satisfied by the services provided by their mobile banking
service provider which shows a need of creating a system for capturing
responses from unsatisfied customers and resolving their issues.

66
 Table No.10
Showing purpose of usage
Sl. No Purpose No. Of respondents Percentage
1 A/c checking 20 20
2 Recent Transaction 12 12
3 Instruction to bankers 14 14
4 Operate between A/c 20 20
5 Ticket booking 4 4
6 Payment of bills 12 12
7 Online stock trading 14 14
8 Others 4 4
Total 100 100
Source: Primary data
Analysis:
From the table it is clear that there is no significant majority. 20% of the
respondents use mobile banking for A/c balance checking and operating between
A/c such as money transfer. 14% of the respondent’s use mobile banking service to
give instructions for bankers and to trade online. And very few people use mobile
banking for ticket booking (4%) and 12% of them use to check recent transactions.
Chart no.10
Showing purpose of using the mobile banking

4%
14% 20%

12% 12%
4%
14%
20%

A/c balance check Recent Transaction

Instructions to bankers Operating between A/c
Tcket booking Payment of Bills
Online Stock Trading Others

Interpretation:
Majority of the customers (20%) use the mobile banking to check their
account status as it might be a free service provided by the banker unlike operating
between two accounts for money transfer. This is a positive sign for banker because
he can increase the customer database by promoting their mobile banking and also
through positive word-of-mouth.

67
 Table no.11
Showing the facilities provided by the banks

Sl. No Facilities No. Of respondents Percentage

1 Free bill payment 28 28

2 Password reset 50 50

3 Security enhancement 22 22
International fund
4 20 20
transfer
Total 100 100
Source: Primary data
Analysis:
From the analysis it is clear that many of the banks provide online
password reset. Major number of customer 50% voted that their banker
provide the password reset to easily remember their passwords. 28% of the
banks provide free bill payment. And 22% of the banks provide security
enhancement which is more important than others.
Chart no.11
Showing facilities provided by the banks
50%

50%
40% 28%
Percentage

22%
30% 20%
20%
10%
0%
Free Bill Password Security International
Payment Reset Enchancement fund transfer
Facilities Provided

Interpretation:
From the analysis it is clear that most of the banks provide online password reset to
change the passwords of customers. Which help the customer to change their
account password from time to time to keep the account secure, so that the account
security details cannot be guessed. And banks also provide free bill payment to
encourage usage of internet banking and to earn goodwill for the bank.

68
 Table no. 12
Awareness about the services offered by service providers

Sl. No Gender No. Of Respondents Percentage

1 Yes 38 38
2 No 62 62
Total 100 100
Source: Primary data
Analysis:
From the above table it is clear that a majority of respondents 62% are not
aware of the services offered by their mobile banking service providers.

Chart no. 12
Awareness about the services offered by service providers

Respondents

38%

Yes
62%
No

Interpretation:
From the above chart we can interpret that though mobile banking is a new
technology and it has a large scope in terms of usage a majority of
respondents are not aware of all the services they are offered .Only 38%
people know about all the services offered.

69
 Chapter 6
FINDINGS, SUGGESTIONS AND CONCLUSION

70
Findings
1. The survey shows that a majority of users were between the age group of
26 – 30. The internet banking does not seem popular among the above 41
age group with only 8% representing the sample size.
2. Among the mobile banking users a significant percentage i.e. 82% of the
sample are post graduates and graduates and negligent percentage are
diploma holders and others.
3. Majority of the users are the salaried class who form 66% of the sample
size. The students are the next frequent user while self employed and
professional formed the next category.
4. The top layer of the society i.e. people drawing a salary of more than Rs.
30,001 every month are the maximum users of mobile banking, the next
being the 10,001 to 20,000 group. The mobile banking and the income
level seem to be directly proportional.
5. There are respondents who use mobile banking monthly (44%), weekly
basis (30%), daily basis (14%), and as and when required (12%). A
substantial number of respondents still use it only when required and the
banker have to attract such customers towards frequent usage
6. .A note worthy section of the customers use mobile banking to operate
between accounts and to check their account balance (20%) while the
others used it for giving instructions to bankers and online trading (14%),
payment of bills (12%), account statement generation (12%).
7. With respect to facilities provided by the banks online password reset with
50% stood first in the minds of customers. Free bill payments 28% and
security enhancement 22% comes next.
8. The survey shows that 34% of the users feel response time is the most
important factor.
9. There was a highly positive response of 44% in the category of security.

71
Suggestions

1. The users among the female segment are quite low as compared to their
male counterparts. The banks need to educate housewives and working
ladies in order increase their customer base and to encourage the female
segment to use this facility.
2. The mobile banking is popular among the youth. If trend continues then
the banks would be catering only to the niche market, so efforts must be
made to bring in the age group of 40 and above.
3. Only the elegant and educated classes of the country like the graduated
and post-graduates do the mobile banking. The banks should also target
the non-graduates and business men.
4. The salaried part forms a majority of the population. The usage level
among the students, professionals and self-employed need to be increased
to a larger extent.
5. The survey shows that a majority of the users from the top layer of the
economic society i.e. people with an annual income of more than 30,001.
As the income decreases the mobile banking habits seemed to be
unpopular. Though mobile banking is catering to the needs of the higher
income group it is time that this facility flowed on to the lower group
income group also.
6. Above 40% of the users use mobile banking monthly. 15% of them use it
for daily this frequency of usage need to be increased through internet
advertising, promotional schemes, and promotional offers, value added
services etc...
7. The silver lining is that 50% of the customers receive information on
various promotions schemes. The bankers can here by send mails and
individual letters to the mobile banking users as well as the customers to
inform and educate the customer about the other facilities available.

72
Conclusion
Banks can have a tie-up with other banks so that the customers can
transact between accounts of various types of banks. Banks have to eliminate
the fear of security from the customers mind, make it more user friendly.
They also need to make ways for retrieving the passwords in case the
customer has forgotten. Banks need to promote this facility at par with other
products and services. The package needs to be updated quite frequently. Till
date only a few banks have adopted mobile banking into its threshold, more
banks should come up with such facilities.

Mobile banking in India is set to explode; approximately 43 million

urban Indians used their mobile phones to access banking services during
quarter ending August, 2009, a reach of 15% among urban Indian mobile
phone user.

Today, it is a known fact that a mobile phone is not just a

communication tool but a multitasking device that throws ample
opportunities for businesses. The mobile banking concept addresses the
limitation of Internet banking. Still the users face many problems right from
the telecom operator to banks, the handset to software application support for
using services. Above that still there's lack of trust while using mobiles for
banking, so awareness needs to be created at large.

73
Annexure
Questionnaire

Dear Sir/ Madam,

It gives me immense pleasure to introduce myself as Mr.Darshan.M studying

4th semester MBA at PG Department of Sahyadri Arts and Commerce,
Shivamogga. I have undertaken the project entitled “A study on the
customer response towards Mobile Banking” With special reference to
SBM, Shimoga”. Hence, I request you to fill the questionnaire and provide
relevant information. I will ensure you that the information provided by you
will only be used for academic purpose and the collected data will not be
revealed to any other external party/agency.

Thanking You

Yours faithfully
DARSHAN.M

1. Name:
2. Address

3. Age Group
a. 20 -25 []
b. 26 – 30 [ ]
c. 31 – 35 [ ]
d. 36 – 40 [ ]
e. Above 41[ ]

74
4. Educational qualification
a. Post Graduate [ ]
b. Diploma Holder[ ]
c. Graduate []
d. Others Please Specify [ ]
5. Occupation
a. Self Employed [ ]
b. Salaried []
c. Student []
d. House Wife []
e. Professional []
6. Monthly income
a. Less than 10,000 []
b. 10,001 – 20,000 []
c. 20,001 – 30,000 []
d. Above 30,001 []
7. Are you well aware of mobile banking?
a. Yes [] b. No [ ]
8. How frequently do you use mobile banking?
a. Daily []
b. Weekly []
c. Monthly []
d. As and when needed [ ]
9. Which of the following banks do you use as your Mobile Banking service
providers?
a. SBI []
b. SBM []
c. HDFC []

75
 d. Others []
10.Are you aware of net banking services offered by the banks?
(a) Yes []
(b) No []
11.In which company bank do you have your accounts?
(a) State bank for India []
(b) Canara Bank []
(c) HDFC Bank []
(d) State Bank of Mysore []
(e) Axis bank []
12.Do you feel safe in disclosing your details on net?
(a) Yes []
(b) No []
13.Are you satisfy with your bank services?
(a) Yes []
(b) No []
14.What are your main transactions you would prefer to do by mobile
banking?
(a) Money transfers []
(b) Checking of your current balance []
(c) Create Fixed Deposits Online []
(d) Pay Bills []
15.Are you aware of the methods which can be undertaken to make any kind
of fraud
(a) Yes []
(b) No []

76
16.Are you aware of all the methods which can be taken up to secure your
transaction
(a) Yes []
(b) No []
17.Does your bank educate you about the mobile banking services being
offered?
(a) Yes []
(b) No []
18.What benefits do you see in mobile banking?
(a) Convenience []
(b) Speed []
(c) Transparency [ ]
(d) Time []
19.Are you satisfied with the services and facilities offered by your service
provider?
a. Yes []
b. No []
20.What is your purpose of using Mobile banking?
a. Account balance check []
b. Recent Transaction []
c. Operate between accounts[ ]
e. Ticket booking []
f. Payment of bills []
g. Stock trading []
21.Does your mobile banking service provide the following features?
c. Free bill payment []
d. Password reset []
c. Security enhancement []

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 d. International Fund Transfers []
22. Are you aware of all the services offered by your Mobile Banking service
providers?
a. Yes []
b. No []
23. Please give your response on the following attributes with respect to 5
scale rating.
Very Very
Good Neutral Poor
good Poor
Response Time
Security
Complaint
Resolution
Informative
Easy
Accessibility
Services
Charges

24.Any other Suggestions

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Thank You

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 BIBLIOGRAPHY

 Philip Kotler, Marketing Management, 2003,Pearson Education Inc, New Delhi

 Organisational Behaviour, aswathappa.k – Himalaya publishing house,
Mumbai.
 Agarwal, R, Raastogi, S., & Malhotra, A. (2009), “Customers’
perspectives regarding e -banking in an emerging economy”, Journal of
Retailing and Consumer Services , Vol.16, Iss. 5, pp. 340-351.
 Anthoney, R. (2004), “User Friendly Internet banking: A Survey of Online
Internet banking Retail Initiatives”, Communications of the ACM , Vol. 47,
Iss. 10, pp. 99-102.
 Nitsure, R.R. (2003), “Internet banking: Challenges and Opportunities”,
Economic and Political Weekly , Vol. 38, No. 51/52 , pp. 5377-5381

Websites
www.hdfcbank.com
www.statebankofindia.com
www.statebankofmysore.com
www.sciencedirect.com/science/article
https://www.researchgate.net

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